08-006425 Italica Motors, Inc., And House Of Scooters, Inc. vs. Loon`s Lagoon, Llc. Status: Closed Recommended Order on Wednesday, April 8, 2009.

Summary: The applicant failed to demonstrate that existing line-make dealer inadequately served the relevant market area.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ITALICA MOTORS, INC., AND HOUSE )

OF SCOOTERS, INC., )

)

Petitioners, )

)

vs. ) Case No. 08-6425

)

LOON’S LAGOON, LLC., )

)

Respondent. )

)

RECOMMENDED ORDER

On March 10, 2009, an administrative hearing in this case

was held via telephone before Lawrence P. Stevenson,

Administrative Law Judge, Division of Administrative Hearings

(DOAH).

APPEARANCES

For Petitioners: Adriana DeLima, pro se

Italica Motors, Inc.

5001 Southwest 135 Avenue

Miramar, Florida 33027

Orestes Nunez, pro se

Orestes Nunez, d/b/a House of Scooters

6370 North Highway US 1

Melbourne, Florida 32940

For Respondent: Gregory G. Shonk, pro se

Loon's Lagoon, LLC

234 Highway A1A

Satellite Beach, Florida 32937

STATEMENT OF THE ISSUE

The issue is whether Petitioners are entitled to a motor

vehicle dealership that is proposed to be located in Melbourne,

Florida.

PRELIMINARY STATEMENT

On October 17, 2008, Italica Motors, Inc. and House of

Scooters, Inc. (Petitioners) published a Notice of Publication

for a New Point Franchise Motor Vehicle Dealer in a County of

More than 300,000 Population in the Florida Administrative

Weekly . No dealer of the same line-make filed a petition or

complaint protesting the application within thirty days after

publication of the notice in the Florida Administrative Weekly.

On November 24, 2008, the Department of Highway Safety and Motor

Vehicles, Division of Motor Vehicles (Department) issued a final

order granting a license to House of Scooters, Inc. to sell the

motorcycles manufactured by Thaizhou Zhongneng Motorcycle Co.

Ltd. (ZHNG) from its location in Melbourne, Florida.

By letter filed with the Department on December 22, 2008,

Loon's Lagoon, LLC (Respondent) filed a protest of Petitioners'

application. The letter, signed by Loon's Lagoon managing owner

Gregory Shonk, stated that his company never received the

statutorily required mailed copy of the notice from the

Department and therefore should be allowed to challenge the

issuance of the license to Petitioners despite the running of

the thirty-day period. By letter dated December 23, 2008, the

Department referred the matter to DOAH to assign an

administrative law judge to conduct a hearing "for the sole

purpose of determining the propriety of the protest regarding

issues specifically within the purview of Sections 320.642 and

320.699, Florida Statutes."

The hearing was convened as scheduled, via a telephone

conference call. Orestes Nunez, proprietor of House of

Scooters, testified on behalf of Petitioners. Petitioners'

Exhibits 1 through 5 were admitted into evidence. Gregory Shonk

testified on behalf of Respondent, and offered no exhibits.

By agreement, the record of the proceeding was held open

for ten days to give Mr. Shonk an opportunity to secure

affidavits from Department witnesses. No such affidavits were

submitted. An order closing the record was entered on March 27,

2009, and the parties were given until the close of business on

April 6, 2009, to submit proposed recommended orders.

The hearing was not transcribed. No party submitted a

proposed recommended order. All references to the Florida

Statutes are to the 2008 edition unless otherwise indicated.

FINDINGS OF FACT

1. Respondent is an existing franchised dealer of

motorcycles manufactured by ZHNG.

2. Petitioners have proposed the establishment of a new

dealership to sell the same line and make of motorcycles as

those sold by Respondent.

3. Respondent's dealership is located at 234 Highway A1A,

Satellite Beach, Florida 32937.

4. Petitioners' proposed dealership would be located at

6370 North Highway US 1, Melbourne Florida 32940.

5. The proposed dealership is within a 12.5-mile radius of

Respondent's dealership. Satellite Beach and Melbourne are both

in Brevard County.

6. Petitioners admitted that they did not provide the name

of Respondent's business to the Department for purposes of

notifying the existing dealer of Petitioner's intent to

establish a new dealership of the same line-make. For this

reason, Respondent never received the standard letter of notice

from the Department. Respondent filed its petition as soon as

its ownership learned of the proposed new ZHNG dealership.

7. Orestes Nunez, principal owner of House of Scooters,

testified that he had no way of knowing the names of every

dealer that is selling the ZHNG line-make because the scooters

are brought into this country by four different importers and

sold under different names.

8. None of the scooters are marketed under the name

"ZHNG." Mr. Nunez' proposed dealership would sell the scooters

under the name "Italica," whereas other dealers sell the ZHNG

scooter under other names. Mr. Nunez testified that he was able

to provide the Department the names of other "Italica" dealers,

but could not provide the names of every dealer selling ZHNG

scooters.

9. Petitioners conceded that they could not establish that

Respondent is not providing adequate representation of the ZHNG

line-make within the territory at issue. Petitioners' only

basis for disputing the protest was that it was not timely

filed.

10. Under all the circumstances, it is found that

Respondent's protest was timely filed and that Respondent has

standing to protest the establishment of the proposed

dealership.

CONCLUSIONS OF LAW

11. DOAH has jurisdiction over the parties to and the

subject matter of this proceeding. §§ 120.569 and 120.57(1),

Fla. Stat.

12. The Department is the agency responsible for

regulating the licensing and franchising of motor vehicle

dealers. §§ 320.60 - 320.70, Fla. Stat.

13. Subsection 320.642(1), Florida Statutes, provides:

(1) Any licensee who proposes to establish

an additional motor vehicle dealership or

permit the relocation of an existing dealer

to a location within a community or

territory where the same line-make vehicle

is presently represented by a franchised

motor vehicle dealer or dealers shall give

written notice of its intention to the

department. Such notice shall state:

(a) The specific location at which the

additional or relocated motor vehicle

dealership will be established.

(b) The date on or after which the licensee

intends to be engaged in business with the

additional or relocated motor vehicle dealer

at the proposed location.

(c) The identity of all motor vehicle

dealers who are franchised to sell the same

line-make vehicle with licensed locations in

the county or any contiguous county to the

county where the additional or relocated

motor vehicle dealer is proposed to be

located.

(d) The names and addresses of the dealer-

operator and principal investors in the

proposed additional or relocated motor

vehicle dealership.

Immediately upon receipt of such notice the

department shall cause a notice to be

published in the Florida Administrative

Weekly. The published notice shall state

that a petition or complaint by any dealer

with standing to protest pursuant to

subsection (3) must be filed not more than

30 days from the date of publication of the

notice in the Florida Administrative Weekly.

The published notice shall describe and

identify the proposed dealership sought to

be licensed, and the department shall cause

a copy of the notice to be mailed to those

dealers identified in the licensee's notice

under paragraph (c) . (Emphasis added.)

14. The underscored provisions make it clear that a

licensee proposing to establish an additional dealership must

provide the Department with the names of all dealers franchised

to sell the same line-make vehicle in the county where the new

franchise is proposed. The franchised dealers are then entitled

to receive direct notice from the Department of the proposed new

dealership. Through no fault of its own, Respondent did not

receive direct notice in this case. It is concluded that

Petitioners' failure to meet this statutory duty should not be

held to deprive Respondent of its right to file a protest

pursuant to Subsection 320.642(3), Florida Statutes, as an

affected dealership. Under all the circumstances presented in

this case, Respondent's protest was timely filed.

15. Subsection 320.642(2), Florida Statutes, establishes

the standards of review to determine if establishment of a new,

competing motor vehicle franchise should be granted. Subsection

320.642(2)(a), Florida Statutes, provides in relevant part:

An application for a motor vehicle dealer

license in any community or territory shall

be denied when:

1. A timely protest is filed by a presently

existing franchised motor vehicle dealer

with standing to protest as defined in

subsection (3); and

2. The licensee fails to show that the

existing franchised dealer or dealers who

register new motor vehicle retail sales or

retail leases of the same line-make in the

community or territory of the proposed

dealership are not providing adequate

representation of such line-make motor

vehicles in such community or territory. The

burden of proof in establishing inadequate

representation shall be on the licensee.

16. Pursuant to Subsection (3)(b)1. of Section 320.642,

Florida Statutes, "if the proposed additional . . . motor

vehicle dealer is to be located in a county with a population of

more than 300,000," as in the instant case, then any existing

motor vehicle dealer of the same line-make whose licensed

franchise location is within a radius of 12.5 miles of the

proposed additional dealer has standing to file a protest within

the meaning of Subsection (2)(a)1. of the statute.

17. Respondent is an existing motor vehicle dealer who has

standing to file a protest of the proposed new dealership in

this case.

18. The burden is therefore on Petitioners to prove that

there is "inadequate representation" in the community or

territory of the proposed new dealership, according to the

criteria set forth in Subsection 320.642(2)(b), Florida

Statutes.

19. Petitioners conceded that they could not meet the

burden of proving inadequate representation in the community or

territory of the proposed new dealership.

20. The approval sought by Petitioners should be denied.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED:

That the Department of Highway Safety and Motor Vehicles

enter a final order denying the establishment of Petitioners'

proposed franchise.

DONE AND ENTERED this 8th day of April, 2009, in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of April, 2009.

COPIES FURNISHED :

Electra Theodorides-Bustle, Executive Director

Department of Highway Safety and

Motor Vehicles

2900 Apalachee Parkway

Tallahassee, Florida 32399-0500

Robin Lotane, General Counsel

Department of Highway Safety and

Motor Vehicles

2900 Apalachee Parkway

Tallahassee, Florida 32399-0500

Adriana De Lima

Italica Motors, Inc.

5001 Southwest 135 Avenue

Miramar, Florida 33027

Greg G. Shonk

Loon’s Lagoon, LLC

234 Highway A1A

Satellite Beach, Florida 32937

Orestes Nunez

Orestes Nunez, d/b/a House of Scooters

6370 North Highway US 1

Melbourne, Florida 32940

Michael James Alderman, Esquire

Department of Highway Safety and

Motor Vehicles

Neil Kirkman Building, Room A-432

2900 Apalachee Parkway

Tallahassee, Florida 32344

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the final order in this case.